INSURANCE: THE FOURTH BASIC NEED

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Car insurance more expensive - Nepal news

Vehicle insurance premium to go up

By: Milan Mani Sharma

Insurance Board (IB), the insurance regulatory authority, is enforcing a new vehicle insurance tariff, which makes policyholders pay more for the service but also ensures them better returns from the company. “We are adjusting the rate of vehicle insurance on the higher side, as the degree of risk in the transportation sector has increased significantly with the number of vehicles, as well as rate of accidents increasing sharply over the years,” an IB official told the Post.  However, he added, the change being affected on premium was nominal, while the extent of coverage and facilities ensured against it was more pronounced in favor of policyholders. Among others, the new General Rules for Vehicle Tariff will tighten companies on provisions related to third party liability, the source stated.  Once it comes into effect, the new rules will make it mandatory for the companies to bear instant liability of Rs 25,000 (on behalf of the policyholder) in case the accident victim dies. “The company will need to pay Rs 25,000 as ‘no-fault liability’ to victim of accident, irrespective of the cause (and faults) of the accident,” said the source.  There was no such provision earlier. 

The rules also propose significant increment in the amount of death compensation from the existing Rs 17,500.  However, it does not specify the amount, as the provision is currently dealt with in the Transport Management Regulations and any change in that amount can be done only be amending those regulations. “We have already recommended the Transport Management Department to take appropriate  steps to change this provision,” the official said. Likewise, the rules increase the companies’ third party liability for passenger vehicles to a maximum of Rs 600,000 from existing Rs 300,000.  it further provisions insurers to cover 100 percent of medical bills as well.  The IB official further said that the changes in tariff were mooted after extensive analysis of vehicle insurance business showed that existing premium rates were not sufficient to back up claims the companies received.
Currently, the premium tariff for private vehicles stands at 2 percent of the insured sum, while that for commercial vehicles and motorcycles stands at 1 percent and 0.5 percent of the insured sum.The review in the tariff was initiated as per the demand of the insurers since they have been arguing for an increment in the tariff for the last three years to address changes in the market composition, net premium, and net claim paid ratio. Vehicle insurance and primarily the commercial vehicles insurance business is a loss-making business in the country, according to the officials.

 

 

Source: The Kathmandu Post, March 24, 2005

keyterms: insurance, car, economic loss, accident, vehicle, safety, Nepal

 

 

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